SB 386

Bill Subjects

Abstract

Provides that an electric utility that has certain qualified costs that: (1) are associated with an electric generation facility that will be retired from service within 24 months; and (2) are equal to at least 5% of the electric utility's total electric base rate; may file a petition with the utility regulatory commission (IURC) for a financing order authorizing the securitization of the qualified costs. Provides that an "electric utility", for purposes of the bill, is a public utility that: (1) owns or operates any electric generation facility for the provision of electric utility service to Indiana customers; (2) is under the jurisdiction of the IURC; and (3) has a total of not more than 200,000 retail electric customers. Provides that not later than 240 days after a petition for a financing order is filed, the IURC shall conduct a hearing and issue an order on the petition. Provides that in issuing a financing order for cost securitization, the IURC must find that: (1) the electric utility has proposed a reasonable mechanism to reflect a reduction in the electric utility's base rates and charges upon the assessment of securitization charges on customer bills, so as to remove any qualified costs from the electric utility's base rates; and (2) the mechanism will provide timely rate savings for customers. Provides that in issuing a financing order for cost securitization, the IURC must find that the electric utility will make capital investments in Indiana in an amount equal to or exceeding the amount of the electric utility's qualified costs, over a period of not more than seven years immediately following the issuance date of the securitization bonds. Provides that if the IURC makes the required findings with respect to the petition, the IURC shall issue a financing order that authorizes: (1) the issuance of securitization bonds with a term of not more than 20 years; (2) the collection of securitization charges from the electric utility's customers; and (3) the encumbrance of the resulting securitization property with a lien and security interest. Provides that qualified costs authorized in a financing order shall be allocated to the electric utility's customer classes using the same cost allocation methodology approved by the IURC in the electric utility's most recent base rate case, subject to certain exceptions. Provides that if an electric utility does not cause securitization bonds to be issued not later than 90 days after the date of a final, non-appealable financing order, the electric utility shall file a statement of abandonment with the IURC stating the reasons for the abandonment. Provides that a financing order issued by the IURC under these provisions must include a mechanism: (1) requiring that securitization charges be reviewed and adjusted by the IURC at least annually; and (2) allowing an electric utility, on its own initiative, to apply to the IURC at any time during a calendar year for an adjustment of its securitization charges, as the electric utility determines to be necessary; to correct any over collections or under collections of securitization charges, and to ensure the recovery of amounts sufficient to timely make all payments of debt service in connection with the securitization bonds. Sets forth provisions concerning the encumbrance of securitization property with a lien and security interest, including provisions concerning: (1) the attachment and perfection; and (2) the priority; of a security interest in securitization property. Specifies that securitization bonds are not: (1) a debt or obligation of the state; or (2) a charge on the state's full faith and credit or on the state's taxing power. Pledges that the state will not: (1) take or permit any action that would impair the value of securitization property; or (2) reduce, alter, or impair related securitization charges; until certain obligations in connection with the related securitization bonds have been paid or performed in full. Requires the IURC to adopt rules to implement these provisions. Urges the legislative council to assign to the interim study committee on energy, utilities, and telecommunications (committee) the task of studying during the 2022 legislative interim: (1) the implementation; and (2) use by electric utilities; of the bill's provisions concerning the securitization of costs for retired electric utility assets. Provides that if the committee is assigned to study this topic, the committee: (1) shall consider available data and other information concerning participating electric utilities to which the IURC has issued a financing order under the bill's provisions; (2) may request this data and information from certain parties; and (3) shall, not later than November 1, 2022, submit to the legislative council a report setting forth the committee's findings and recommendations, including the committee's recommendations as to whether to allow, under the bill's provisions, additional electricity suppliers to securitize costs associated with retired electric utility assets.